TAX CASE hen a taxpayer owes interest to a related foreign entity that is exempt by treaty, Treasury regulations section 1.267(a)-3 requires that the taxpayer use the cash method. The Seventh Circuit Court of Appeals affirmed the validity of this regulation. Using an acquisition company, Schneider SA, a French corporation,
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Tax
FYI
Kathleen L. Casey was sworn in as the 88th SEC commissioner by Chairman Christopher Cox in July. She is a 13-year veteran of Capitol Hill, having served as legislative director and chief of staff for Senator Richard Shelby (R-AL) and staff director of the Senate Banking Committee’s Subcommittee on Financial
International
As the direct result of December 2005 talks between SEC Chairman Christopher Cox and Committee of European Securities Regulators (CESR) Chairman Arthur Docters van Leeuwen, the two groups in August published and implemented a joint work plan on the application by international companies of international financial reporting standards (IFRSs) in
Medical Reimbursement Plan for Employee-Spouse
TAX CASE mployees can exclude reimbursement they receive from their employers for medical expenses—and employers can deduct payments made to employees—only under certain conditions. There must be a bona fide employer-employee relationship and a proper plan, even if unwritten, that conforms to IRS guidelines for medical reimbursement plans. And covered
FYI
The SEC selected Mark W. Olson to be chairman of the Public Company Accounting Oversight Board until 2010. At the time of his appointment, he was a governor of the Federal Reserve Board. Although not a CPA, Olson also was a partner of Ernst & Young and its predecessor, Arthur
International
The International Accounting Education Standards Board of the International Federation of Accountants (IFAC) released International Education Standard (IES) 8, Competence Requirements for Audit Professionals, which outlines the professional knowledge, skills, values and attitudes that auditors need to conduct financial statement audits. As of July 1, 2008, IFAC member bodies will
IRS Updates the “Dirty Dozen”
Source: IRS, www.irs.gov/newsroom/article/0,,id=154293,00.html , 2006.
Accounting
For news from the AICPA and state societies, visit www.cpa2biz.com , which also offers online CPE, AICPA professional literature, practice management aids and links to state society Web sites. FASB and the International Accounting Standards Board (IASB) published a draft version of the first two chapters of an enhanced conceptual
Cash Advances to a Corporation: Loan or Capital Contribution?
TAX CASE hen cash is transferred to a closely held corporation, is the transfer a loan or a capital contribution? The transfer is treated as a loan if there is an unconditional obligation to repay it. When there is a dispute, the courts look at factors such as the presence
Refining the Definition of a Personal Service Corporation
TAX CASE n 1987 Congress amended the tax law to provide that a personal service corporation (PSC) is not eligible for graduated corporate tax rates. Pursuant to IRC section 11(b)(2), PSCs pay tax at the flat rate of 35% on their taxable income. Recently, the Tax Court had an opportunity
Practice Management
The AICPA Work/Life and Women’s Initiatives Executive Committee released “Staff Retention: The New Face of the CPA Profession,” a DVD in which professional staffing experts, leading CPAs and young members of the profession discuss recruitment and retention strategies. The committee also issued a report, “What Women in the Profession Are
Corporate Reporting
The European Federation of Accountants (FEE) published a discussion paper, Key Issues in Sustainability Assurance—An Overview, encouraging the International Federation of Accountants to develop an international standard for sustainability assurance ( www.fee.be ). FEE said such a standard would improve auditors’ ability to assess corporations’ reports on the effectiveness of
Courts Try to Distinguish Debt From Equity
ederal income tax law treats debt and equity differently; primarily, interest payments on debt are deductible, while dividend payments are not. Whether a corporate investment (despite its formal label) is debt or equity for tax purposes is a factual question with no clear answers. CPAs with corporate clients should
E-Filers Find a Permanent Home
Source: The Conference Board, www.conference-board.org , survey of 10,000 households.
Government Accounting
The Governmental Accounting Standards Board issued Technical Bulletin no. 2006-1 to clarify how state and local government entities should report payments received from the federal government under the retiree drug subsidy provisions of Medicare Part D. The bulletin (product no. GTB0601) can be ordered at http://gasbpubs.stores.yahoo.net/gtb0601.html . With certain exceptions,
Compliance
The SEC Office of the Inspector General (OIG) recommended that the commission’s Division of Corporation Finance continue improving its preliminary reviews of corporate securities filings ( www.sec.gov/about/oig/ ). The recommendations were part of the OIG’s report on its audit, from January through October 2005, of the division’s preliminary review process.
IRS Costs Rise
Source: IRS, www.irs.gov .
Free at Last!
Source: Tax Foundation, www.taxfoundation.org , June 2006.
Financial Reporting
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) released Internal Control over Financial Reporting—Guidance for Smaller Public Companies to supplement Internal Control—Integrated Framework, t he committee’s landmark 1992 publication that outlined a comprehensive framework for internal control systems. The new guidance was developed primarily to help smaller public
Can Capital Losses Be Carried Back for the AMT?
TAX CASE axpayers pay an additional tax when their alternative minimum tax (AMT) liability exceeds their regular tax liability. In some cases, regular tax deductions and exclusions of income are not allowed for the AMT. Differences between the two tax liabilities also can be due to the acceleration of income
Features
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4 ways solo practitioners can stand out
Five years ago, a grieving Angel Zhen started his own CPA firm with no clients and no revenue. Today, he has 300 clients, $600,000 in revenue and 12 weeks of annual vacation. In this JofA article, he shares how he set up his firm and how you could do the same.
From The Tax Adviser
April 30, 2026
Current developments in taxation of individuals: Part 2
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